1. Appeal under Section 37 of the Arbitration and Conciliation Act against judgment setting aside arbitral award under Section 34. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 )
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2026 Supreme(Online)(Del) 17002
IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, Manmeet Pritam Singh Arora, JJ
Ssangyong Engineering And Construction Co. Ltd. – Appellant
Versus
National Highways Authority Of India – Respondent
FAO(OS) (COMM) 132/2024 | FAO(OS) (COMM) 136/2024
Advocates:
For the Appellants/Petitioners: Navin Kumar, Surbhi Agarwal, Rashmeet Kaur, Aarti Mahto
For the Respondents: Ankur Mittal, Arpit Sharma
For the Appellants/Petitioners: Navin Kumar, Surbhi Agarwal, Rashmeet Kaur, Aarti Mahto
For the Respondents: Ankur Mittal, Arpit Sharma
An arbitral award is liable to be set aside if the tribunal fails to adjudicate a material dispute submitted to it, violating natural justice, or if common arbitrators provide irreconcilable and unexplained contradictory findings on identical contractual terms in related cases, shocking the conscience of the court.
Headnote:(A) Arbitration - Non-adjudication of material dispute - Failure of the Arbitral Tribunal to decide on the correctness of a payment certificate, which was the core issue of the dispute, constitutes a violation of the principles of natural justice and falls under Section 34(2)(a)(iv) of the Arbitration and Conciliation Act, 1996. (Para 34, 39, 40)
(B) Public Policy - Basic notions of justice - Unexplained and irreconcilable contradictions in findings by common members of an Arbitral Tribunal across two separate awards involving identical contractual terms and facts shock the conscience of the court and conflict with the most basic notions of justice. (Para 61-68)
(C) Limitation - Counter-claims - When an award is set aside and remanded for fresh adjudication of the core dispute, the issue of limitation for counter-claims, which is intrinsically linked to the character of the disputed certificate, must also be re-evaluated. (Para 46)
Issues: Whether the Arbitral Award could be set aside due to the failure to adjudicate the Respondent's defense and due to irreconcilable contradictions in findings by common arbitrators in related proceedings.
Legal Category Hierarchy
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arbitration and conciliation
- appeals
- arbitral award
- practice and procedure
Table of Contents
2. Appellant argues limited Section 34 scope violated and natural justice not breached. Respondent contends non-adjudication of its defence and counter-claim. (Para 16 , 17 )
3. The tribunal failed to adjudicate the core dispute regarding the certificate’s correctness, violating natural justice and the statutory mandate. (Para 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 )
4. An arbitral tribunal’s failure to decide a material dispute submitted to it, causing prejudice, violates Section 34(2)(a)(iv) of the Act. (Para 36 , 37 , 38 , 39 , 40 )
5. Appeals dismissed; impugned judgment setting aside award and remanding for fresh adjudication upheld. (Para 72 , 73 , 74 )
6. Can an arbitral award be set aside under Section 34 of the Arbitration and Conciliation Act for non-adjudication of a dispute?
Yes, if the tribunal fails to decide a material dispute submitted to it, causing real prejudice to a party, the award is vulnerable under Section 34(2)(a)(iv) of the Act. (Para 36 , 37 , 38 , 39 , 40 )
7. Does an arbitrator's failure to adjudicate a party's defence violate principles of natural justice?
Yes, the failure to adjudicate a material defence raised by a party violates the principles of natural justice enshrined in Sections 18 and 34(2)(a)(iii) of the Act. (Para 37 , 38 , 39 )
8. Can inconsistent findings by common arbitrators on identical contracts be a ground to set aside an award?
Yes, such an unexplained departure from a previous position on identical facts can conflict with the most basic notions of justice, violating public policy under Section 34(2)(b)(ii) of the Act. (Para 59 , 60 , 61 , 62 , 63 , 64 , 65 , 68 )
9. Is the principle of non-interference with a ‘plausible view’ applied when conflicting arbitral awards exist on identical clauses?
No, the Supreme Court has held the ordinary rule of non-interference cannot be mechanically applied when conflicting awards interpret the same clause, as it creates an anomalous situation. (Para 65 )
JUDGMENT
MANMEET PRITAM SINGH ARORA, J.
1. FAO(OS) (COMM) 132/2024 has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 [‘Act of 1996’] read with Section 13 of the Commercial Courts Act, 2015 assailing the judgment dated 08.04.2024 passed by the learned Single Judge [the ‘impugned judgment’] in exercise of its jurisdiction under Section 34 of the Act of 1996 in OMP(COMM) No. 340/2021, whereby the Arbitral Award dated 26.06.2021 [‘impugned Award’] has been set aside at the instance of the Respondent, and the disputes [including claims and counter-claim] have been remanded back to the Arbitral Tribunal for fresh adjudication.
2. FAO(OS) (COMM) 136/2024 has been filed assailing the judgment dated 08.04.2024 passed in Section 34 petition being OMP (COMM) No. 256/2021 filed by the Appellant, on the plea that learned Single Judge failed to adjudicate the Appellant’s challenge to the impugned Award rejecting the Appellant’s claim for pre-award and pendente lite period for interest at 10%per annum on the awarded amount, compounded monthly.
FACTUAL MATRIX
3. On 30.12.2005, the Appellant was awarded a contract by the Respondent for the construction of a highway on the Jhansi-Lakhanadon Section in the State of Madhya Pradesh for about 54 Km. between Km 211 to Km 255 of NH-26 (Contract Package-ADB-II/C-6) [the ‘contract’ or ‘contract package C-6’] at a Contract Price of Rs. 163,87,02,003/-.
4. It is stated that the contract in question, being a FIDIC, International Federation of Consulting Engineers standard form contract, stipulated that execution of the contract would be supervised by an independent third party, i.e., the Engineer.
5. Accordingly, as per Clause 2.1 of General Conditions of the Contract [‘GCC’], the Respondent/Employer had appointed M/s. Roughton International to act as ‘the Engineer’.
6. As per Clause 2.6 of GCC, it was provided that the Engineer shall have the authority to inter alia give his decision, opinion or consent, determine value, or otherwise take action which may affect the rights and obligations of the Respondent/Employer or the Appellant/Contractor. Such power was to be exercised by the Engineer impartially, having regard to all circumstances.
7. It was specifically agreed in terms of the said Clause 2.6 of GCC that “any such decision (sic. of the Engineer), opinion, consent, expression of satisfaction, or approval, determination of value or action may be opened up, reviewed or revised as provided in Clause 67 of COPA (i.e. the Dispute Resolution Mechanism under the Contract)”.
8. It is stated that upon substantial completion of work, the project was to be taken over by the Engineer by issuing a Taking Over Certificate [‘TOC’] in terms of Clause 49 of GCC, which was also the point of commencement of the Defects Liability Period [‘DLP’] for a period of 365 days.
9. It is stated that the Appellant executed the contract under the instructions of the Engineer. It is stated that as per Sub-Clause 60.1 of the Conditions of Particular Applications [‘COPA’] the Appellant submitted monthly statements to the Engineer for each month in respect of the work executed up to the end of the previous month. It is stated that the monthly statements were submitted in the form of an Interim Payment Application [‘IPA’]. It is stated that, pursuant to Sub-Clause 60.2 of COPA, the Engineer, upon verification of the work executed, determined the amount due to the Appellant under the IPA and issued to the Respondent and the Appellant the corresponding IPC for payment against the IPA. It is stated that the Appellant raised several IPAs during the execution of the contract, and that a total of 72 IPCs were issued by the Engineer, which have been duly paid by the Respondent to the Appellant.
10. It is stated that the project was completed on 30.10.2012, as certified by the TOC dated 06.04.2013. The certificate recorded that the work was determined as complete as on 12.03.2013. The DLP was completed on 12.03.201
